Known as passive funds, trackers aim to replicate the performance of a specific index, such as the FTSE All-Share Index.
Tracker funds attract new investors because they grow modest but stable returns over the long term, without you needing any investment knowledge. They also tend to have lower fees as they do not require an active Fund Manager.
According to the Investment Association; trackers share of the investment market has risen by 13% between 2018 – 2019.
By comparison, active funds try to outperform the market and are run by Fund Managers — who buy and sell stocks based on their own research.
According to research, only 39% of active funds have beaten the market over the past five years.
Analysts insist there is still space for skilled fund managers who act with conviction. However, investors have started to question whether the extra fees that Fund Managers charge value for money.